Increased Scrutiny Of Interactions Between Health Care Providers And Pharmaceutical And Device Companies

Legitimate, useful relationships between health care providers

and pharmaceutical, medical device, and diagnostics companies

transcend the purchase and sale of drugs and devices. Collaboration

between providers and pharma/device companies serves the beneficial

purposes of advancing medical technology and drug development,

promoting the safe and effective use of products, and developing

research, education, and treatment skills. Providers and

pharma/device companies must be aware, however, that federal

regulators, including the Department of Health and Human Services

Office of Inspector General ("OIG") and the Department of

Justice ("DoJ"), are examining these collaborations

closely to determine if they violate the federal Anti-Kickback

Statute, 42 U.S.C. § 1320a-7b(b).

The Anti-Kickback Statute prohibits the payment, offer to pay,

solicitation, or acceptance of remuneration to induce patient

referrals or the purchase of goods or services for which payment is

made under a federal health care program. This includes payments to

induce the purchase of drugs or devices. Ordinary interactions

between providers and companies, such as providers' payments

for goods and services and companies' direct or indirect

payments to physicians, researchers, and hospitals, can trigger

scrutiny under the statute. The latter category of direct and

indirect payments can include rebates, clinical research funding,

donations, product royalties, consulting fees, honoraria,

reimbursement for continuing medical education, speaking

engagements, advisory board participation, travel, sample products,

and free equipment. While such exchanges can be completely

legitimate and appropriate, if they are motivated by illicit

purposes (such as to induce the purchase of goods outside of a safe

harbor), they can implicate the federal Anti-Kickback Statute, as

well as the False Claims Act, 31 U.S.C. §§ 3729, et

seq., and similar state laws.

An anti-kickback investigation focuses on whether a

pharmaceutical or device company made a payment, in cash or in

kind, to a provider to induce the purchase of the company's

goods. Recent well-publicized investigations of pharmaceutical

companies, enteral/parenteral companies, orthopedic device

companies, and cardiovascular device companies illustrate the types

and circumstances of payments targeted by regulators.

Drug Studies and Clinical Trials

DoJ and OIG have investigated industry support for drug studies

and clinical trials, including...